Bell Bay Aluminium and the Tasmanian government has reached an in-principle agreement to extend a power supply contract, giving more time for state and federal governments to determine a long-term plan for the aluminium smelter.
The Tasmanian government announced that it has “paved the way to secure the immediate future of Bell Bay Aluminium” with the 12-month power agreement.
Jeremy Rockliff, Premier of Tasmania, said: “The smelter is a cornerstone of Tasmania’s economy, directly employing over 550 people and supporting hundreds more through a supply chain of almost 300 local businesses.”
“We are doing all we can to make sure the business continues to have a strong future in the state. We are committed to supporting the workforce and the wider community.”
Bell Bay Aluminium’s electricity contract was due to expire on December 31. The company warned staff in October that it had not reached a new power deal with Hydro Tasmania after extensive negotiations over the past 18 months, ABC News reported in October.
Tasmanian energy minister Nick Duigan said that there was a “gap” between what Hydro Tasmania was offering and the price that made Bell Bay Aluminium commercially viable.
In a separate statement, Rio Tinto, Bell Bay Aluminium’s parent company, said the extension will ensure continued negotiations with Hydro Tasmania and the Tasmanian government towards a new 10-year agreement.
“It also allows time for the outcome of the federal government’s Green Aluminium Production Credit program to be known,” according to the company statement.
The credit is set to be available from 2028 to support Australia’s aluminium smelters’ transition from fossil fuels to renewable electricity.
Bell Bay Aluminium is one of Australia’s smelters struggling to continue operations amid rising energy prices and carbon changes. Another Rio Tinto aluminium smelter, Tomago Aluminium, had warned that it could not identify a pathway to support operations beyond the expiration of its energy contract in 2028.
Senator Tim Ayres, Minister for Industry and Innovation and Minister for Science acknowledged in a press conference that energy prices are challenging for the country’s smelters.
He said: “24 out of 28 coal fired power stations announced their closure with nothing new being built. That energy was going to be a challenge, and we are working through those questions.
“But to add to that, a volatile trade environment, particularly for aluminium and steel products and all those questions mean that there’s a responsibility for us to work these issues through.
“We’re going to keep on the case, I am absolutely committed to all these facilities, the future is uncertain, but we’re getting on with the job. “
